VAT

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VAT is calculated on energy supply to businesses at 20%. However, there are some exceptions where supplies to businesses may be eligible for the reduced rate at 5%.

You may be eligible if:

  1. The meter is for domestic use (Qualifying Use)
  2. The meter supplies a charitable organisation that carries out non-business activities (Qualifying Use)
  3. There is low usage on the meter (De Miniis)

Qualifying Use categories

If a site qualifies as either domestic or charitable non-business use, they may be eligible for the reduced rate of VAT.

  • Domestic Use: The meter must supply a dwelling or other residential accommodation to qualify as domestic use. If there is a mix of business and domestic use at the property, the split will need to be calculated when informing us of the amount of qualifying usage.
  • Charitable Non-Business Use: The meter must supply a site where charitable activities take place. The eligible activities must be considered non-business use. If there is a mix of business (including charitable) and non-business use, the split must also be calculated.

For examples of how activities are categorised by HMRC, please see our VAT & CCL Guidance document here.

If there is mixed usage and you are unsure how to calculate the split, this can be discussed with HMRC directly.

Applying for an exemption as a Qualifying Use customer

If you wish to apply for the reduced VAT rate due to domestic or charitable non-business activities, you will need to complete a VAT declaration form. Please download the form via the link below and submit this to our Welcome Team at customeronboarding@sefe-energy.com.

De Minimis reduced VAT rate

De minimis is a term used to describe the threshold at which VAT will either be charged at 5% or 20% if the site does not qualify for a VAT exemption. If the consumption falls below the De Minimis level, this is considered as domestic use by HMRC regardless of the actual use and will be charged at 5%. In these instances, consumption is calculated based on meter reads and the VAT will be calculated from this, so you will not need to provide any supporting evidence.

The De Minimis level for gas consumption is below an average rate of:

  • 5 therms or 145 kilowatt hours per day
  • 150 therms or 4,397 kilowatt hours per month

For electricity, the De Minimis threshold is below an average rate of:

  • 33 kilowatt hours per day
  • 1,000 kilowatt hours per month

For more information, visit gov.uk. De-minimis is explained in sections 3.2.2, 4.2 (for gas) and 5.2 (for electricity).

Visit .Gov

Further information on VAT

To find out if you are eligible for reduced rates please read our VAT and CCL guidance.

For further information regarding VAT, get in touch with a member of our award-winning Customer Service team here.

Alternatively, you can contact the HMRC National Advice Centre directly by phone at 0845 010 9000 or through their website: http://www.hmrc.gov.uk.

Common Questions VAT FAQs

Our FAQs provide answers to commonly asked questions about who we are, what we do, our products, and how we work.

Can a VAT reduction be back-dated?

If the site is still live with SEFE Energy, we can back-date amendments to VAT charges up to four years. If the site is no longer supplied by SEFE Energy, then we are unable to amend this.

How do I calculate the qualifying percentage for reduced VAT?

The qualifying percentage is the amount of your usage that qualifies for reduced VAT. This is the split between the domestic or charitable non-business use and the business (including charitable business) use on the site. For more personalised advice on how to calculate this percentage, please contact HMRC directly on 0300 123 1073.

If I have more than one site that qualifies for VAT reduction, can I submit them on the same form?

We can accept forms with more than one qualifying MPRN if the company name and ‘Details of Your Claim’ section is the same for all sites. If the sites have a different qualifying percentage, classification of claim or reason for claim then we require separate forms.

We can accept them on the same form if they have different site addresses, but the addresses must be supplied for each MPRN. This can be added as an appendix to the form.

I don’t have an exemption, but I’m being invoiced at 5% VAT. Is this right?

In cases where we haven’t received a VAT declaration form, VAT is calculated based on the amount of consumption. For more information regarding this, please see our section on De Minimis.

My meter supplies a charitable organisation, but my VAT declaration has been rejected. Why is this?

If your company has charitable status but your application for reduced VAT has been rejected, it may be due to activities on the site falling under the category of charitable business use.

Only charitable non-business use qualifies for reduced VAT. If you would like more information on the distinction between the two, please refer to our guidance sheet. If there is both charitable business and charitable non-business use at the site, you will need to calculate the split between them for the qualifying percentage.

My contract is renewing soon, will I need to send a new VAT declaration form?

If none of the details on your contract have changed then you will not need to submit a new form. If there have even been slight changes, such as to the contracted company name, you will need to re-submit as we need the details on the form to match the details on the contract.

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